Prime Minister Theresa May has ordered a major review of student financing in England, after sustained criticism of the current system.
The government was criticised by the Treasury Committee this weekend, with the cross-party group of MPs asking the Prime Minister to look at the “questionable” current system, while the National Audit Office (NAO) slammed universities for ‘mis-selling’ poor value courses in December 2017.
Now Theresa May has announced a major review of university funding after admitting that the reforms introduced by the Conservative-Liberal Democrat coalition government in 2012 have not created worthwhile competition between institutions.
Most universities simply charge the maximum annual fee – currently £9,250.
The year-long review will be authored by financier Philip Augar and will look at the whole 18+ education system in England.
The report will consider how the system can provide the best value for money for students as well as taxpayers in general, and how graduates should be expected to pay for the cost of their studies.
At present, graduates are charged different rates of interest depending on when and where in the UK they studied. The review will also examine whether the interest rate charged on post-2012 students loans, which is currently as high as 6.1%, is fair.
Research published by the Institute for Fiscal Studies says that in some cases students have racked up more than £5,000 in interest charges before they have even finished their course.
‘The level of fees does not relate to the cost or quality of the course’
“We now have one of the most expensive systems of university tuition in the world,” Mrs May told the audience in Derby.
“The competitive market between universities which the system of variable tuition fees envisaged has simply not emerged.
“All but a handful of universities charge the maximum possible fees for undergraduate courses. Three-year courses remain the norm. And the level of fees charged do not relate to the cost or quality of the course.”
Jane Goodland, responsible business director at financial provider Old Mutual Wealth, adds: “A deadly cocktail of rising tuition fees and unaffordable housing have led to a generation of graduates who, when first entering the job market and adulthood, may rightly feel their outlook is bleak.
“Theresa May’s year-long inquiry into higher level education is crucial. Research from the Institute for Fiscal Studies shows students face more than £5,000 in interest charges before they even leave university. This results in average graduate debts of more than £50,000.
“When they leave university, their financial situation often becomes more challenging. While they will hopefully be earning money, they will also be faced with substantial housing costs. Priced out of the housing market, graduates are pouring their wages into the bottomless bucket of steep rent.”